OUTLOOK

CURRENCY: Again expect another day where NZD demand is not strong enough to deliver a significant test of 0.72USD. The USD fortunes will be mixed as sentiment around Greece continues to swing the EUR around.

RATES: Expect the local rates to open broadly unchanged following a quiet London session, and a fairly flat AU market.

Review

CURRENCY: Attempts to the topside for the NZD have been sufficiently thwarted against the USD but it continues to lift against the EUR as uncertainty around Greece remains.

GLOBAL MARKETS: Bond sell-off on rumours the Fed may hike the discount rate later today. European equities end session slightly lower, with the Dow broadly unchanged since opening. Stronger USD pushes commodity prices lower.

Key Themes and Views

* The fed Flexes its muscles. Chairman Bernanke has criticised a Senate proposal to limit the Fed's supervision to the largest financial firms. Bernanke told the house financial services committee "insights provided by our role in supervising a range of banks, including community banks, significantly increases our effectiveness in making monetary policy and fostering financial stability." This was in response to the proposal by Chairman of the Senate Banking Committee Dodd to shrink the Fed's authority to banks with more than $50billion in assets. "We are quite concerned by proposals to make the Fed a regulator only of the biggest banks," Bernanke said. "It makes us essentially the too-big-to-fail regulator. We don't want that responsibility."

* fiscal policy in an election year. Next week the UK government will unveil their annual Budget. The focus is on returning the public finances to better health without derailing a hopeful recovery. The UK chancellor has stood by plans to cut the UK fiscal deficit (forecast to reach 12.7 percent this fiscal year) in half by 2014. The opposition Conservative party have attacked the government's management of the public finances, seizing on BOE comments that rising long-term interest rates may have reflected "heightened concerns about the scale of government debt issuance."

Overnight Comments/Events

* US consumer prices unchanged in February. Core CPI increased by 1.3 percent yoy (0.1 percent mom), the lowest since 2004. Activity gauges continue to confirm the US recovery remains on track, with the Philadelphia Fed business activity index climbing from last month.

* US jobless claims fall for third consecutive week. However, the pace of recovery remains slow and does not yet point to a strong pick-up in employment.

* Greek PM Papandreou sets the EU a one-week deadline to craft a financial aid mechanism for Greece. Going to the IMF remains an option.

NZD: Taking a breather The week should end relatively calmly for the NZD. It will remain out of focus for offshore markets are the Greece situation takes the headlines. February migration data will underpin any moves to the downside with the NZD to remain with a 0.71USD handle today.

Expected Range: 0.7112 - 0.7182

NZDAUD: Still knocking Markets are of mixed minds on this cross as it retraces to the first level overnight but is unable to break through resistance. At this point it should finish the week tucked under 0.7789.

Expected range: 0.7735 - 0.7789

NZDEUR: Sliding higher Mixed messages to the markets from Greece and rumours of another US discount rate hike have weakened the EUR. This should mean further topside attempts for this cross although getting past 0.5263 may be too hard today.

Expected range: 0.5222 - 0.5263

NZDJPY: Still waiting While this cross has remained below 65JPY it has not backed off. Demand remains on dips for this cross which should ensure limited movement within the 64JPY range today.

Expected range: 63.85 - 65.00

NZDGBP: Just taking time Further nudges close to the 0.47GBP level occurred overnight but momentum was not enough to push higher. It may well happen again during the remainder of this week's trading session.